The banking sector is changing and has been for several decades. As the world becomes more digital how we conduct transactions is changing too. Perhaps this is not before time as the shortcomings of banking and financial thinking were laid bare in the 2008 financial crash.
Neobanks, which are digital device only affairs seem to be gaining traction with the consumer thanks to their ease of use and no-nonsense device-centric design. With this in mind, let’s look at Neobank features in more depth.
Neobanks are internet only and operated from a mobile device. Like conventional banks, neobanks can make faster payments, Swift transactions and many of the functions traditional banks perform. The user interface design is very easy to grasp and is a good example of excellent fintech practices and design thinking in action.
They are app-only affairs and have no web page where you can perform financial tasks. Everything is run from a phone.
Many traditional banks are also coming under increased regulation and apply practices that have angered many of their customers such as banning payments to and from cryptocurrency exchanges. This has arguably given neobanks an opportunity to exploit. And exploit it they have. In fact, the market share neobanks command is around d$47.1 bn USD and this is predicted to rise.
Tech Banking Solutions
Now we’ve looked at what neobanks are let’s look at if they are the future.
The simple fact is that this new form of banking does everything that little bit faster. The know your customer checks (KYC) can be done in about ten minutes with AI determining who can open an account. They appeal to millennials as they have grown up with mobile technology. A bank that can be run out of the palm of your hand appeals to many, and for millennials, in particular, this is how it should be.
The services offered match many of the services offered by the traditional banking sector. This includes:
- Current accounts
- Business accounts
- Prepaid, debit or credit cards
- Currency exchanges
- Money transfers
- Peer-to-peer payments
- Savings accounts
The banks operate either under their own licence or under the umbrella of another. This new form of banking is not short on services and this is another feather in its cap.
Versatile & Mobile
As banking is run through an app it is very easy to check your balance in a coffee shop or pay for something be it a product or bill. The creators of neobanks have been extremely clever by strategically partnering with other financial institutions to provide customers with all the services expected by banks.
The march of neobanking seems unstoppable. The deeply unpopular traditional banks which have been involved in various scandals from fixing LIBOR interest rates to money laundering have kind of created the opportunities that are being fulfilled by this new form of banking.
If you think about the banking process, it should be a simple affair that is very intuitive rather than a laborious one. And that is what neobanking offers and unless traditional banks explore ways to compete it is clear they are going to lose more and more market share.